Risk-off shift forces AUD toward key supports

Daily Currency Update

AUD - Australian DollarThe Australian dollar shifted sharply lower through trade on Wednesday as markets chased losses in a distinct risk-off move. Having tracked sideways through much of the domestic session, the AUD turned downward overnight as equity markets across Europe and the US suffered steep downward corrections on open with the EURO STOXX 50 and S&P 500 down 1.6% and 2% respectively. Fears pharmaceutical manufacturers won’t deliver COVID-19 vaccines as quickly as first thought escalated overnight as the EU urged AstraZeneca to deliver on its roll-out agenda. The AUD tested lows below 0.7650 before pairing losses ahead of the FOMC policy statement. Fed Chair Jerome Powell affirmed the Fed’s current commitment to accommodative monetary policy yet offered some optimism for a faster than anticipated recovery on the back of the vaccine. With few surprises the USD maintained its momentum through the Fed presser, forcing the AUD back toward intraday lows. While the AUD has staved off moves below support at 0.7640, we will be keenly attuned to any signal the current risk-off shift could extend toward 0.76 and 0.7550. With little of note on today’s domestic agenda, the broader narrative will control direction into the North American session where attentions turn to US GDP data. A surprise uptick in annualised growth in the US could help foster expectations for a post COVID-19 recovery as analysts' attentions begin to drift back toward key underlying fundamentals.